Investment Review №353. In Search of New Landmarks

DFM General Index: 1-Year Dynamics

Abu Dhabi Securities Exchange Index: 1-Year Dynamics

Brent Oil, 1-Year Dynamics

Over the two-week period from August 25 to September 8, UAE equities delivered mixed performance amid rising geopolitical risks and higher oil prices. The DFMGI rose from 5,835 to 5,947 (+1.9%), while the ADXGI slipped from 10,070 to 10,021 (−0.5%). By comparison, the S&P 500 was broadly flat, moving from 7,677 to 7,674. Brent climbed from $88/bbl to $98/bbl (+10.9%), reaching $97.92/bbl on September 8—the highest level since July 23—following attacks on Saudi energy infrastructure.

Industrials (+4.74%) led sector performance, driven by Multiply Group (+8.21%) and Dubai Investments (+4.57%). Consumer Discretionary gained 2.96%, led by Parkin (+4.57%), while Utilities (+1.29%) benefited from DEWA (+4.09%). Consumer Staples rose 0.83%. Real Estate advanced 0.53% (Emaar +1.65%, Aldar +0.90%), while Communication Services gained 0.62% (du +1.22%). Financials fell 1.0%, while Energy declined 2.57% despite the sharp rally in Brent.

UAE bond-proxy yields rose from 5.45% to 5.80% (+34.5bps), while the U.S. 10Y Treasury yield increased from 4.73% to 4.90% (+17bps). The spread widened from 72bps to 90bps (+18bps), pointing to a clear increase in the UAE’s regional risk premium. That said, part of the move in absolute yields reflects the broader repricing of the global risk-free curve.

Economic Updates

The UAE’s non-oil private-sector PMI rose from 52.7 in July to 55.3 in August—the highest reading since December 2024. The acceleration was driven by stronger output and new orders, inventory restocking, improved supply chains and easing price pressures. Dubai’s PMI also improved, rising from 51.7 to 54.1, reinforcing the resilience of domestic demand.

Abu Dhabi Global Market (ADGM) reported a 54% YoY increase in assets under management in 1H. The number of professionals rose 34% to 49,027, active licenses increased to 13,974, and the number of funds reached 276 (+32% YoY). New ADGM participants collectively manage >$2.1tn in global assets.

Export risks remain elevated. Three LNG ship-to-ship transfers were conducted outside the Strait of Hormuz in August, including a cargo controlled by ADNOC. While the workaround helps sustain exports, it comes at the cost of higher logistics expenses and elevated operational risk.

Corporate News

L’imad/ADQ has satisfied virtually all conditions of its offer to acquire up to 100% of AD Ports at ~$1.70/share. ADQ already controls 75.42% of the company. AD Ports’ 2Q net income rose 86% YoY to $162.5m.

IHC agreed to acquire an 80% stake in Marlan Holding, a space-infrastructure company (International Tech Group). Deal value was not disclosed. IHC’s 2Q net income surged 220% YoY to $3.49bn, while revenue exceeded $9.09bn.

Aggregate 2Q net income across Abu Dhabi- and Dubai-listed companies rose 28.6% YoY to ~$21.6bn, driven primarily by banks, real estate and ADX.

Two-Week Outlook

Geopolitics, oil prices and shipping security will remain the key market drivers. Higher Brent supports UAE earnings, but the weakness in Energy equities suggests investors are looking past the headline oil-price tailwind and focusing instead on risks to production, exports and cargo flows through the Strait of Hormuz.

The macro backdrop remains resilient, underpinned by accelerating non-oil activity. Companies exposed to domestic demand and stable cash flows should remain best positioned—including developers, Utilities and infrastructure names, parking operators and select Consumer assets. By contrast, Energy, Logistics and Financials are likely to remain subject to elevated volatility.